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The southern Australian state of Victoria has unveiled the first of its large scale renewable energy auctions in the first major move towards the country's most ambitious renewable energy target of 40% by 2025.

In support of the new legislation for theVictorian Renewable Energy Targets (VRET) the state government has launched a tender for 650 MW of solar and wind capacity.

The tender documents will be released in mid October. The state of Victoria will grant support agreements to the winners, which ensures revenue certainty through a Hybrid payment mechanism, including a combination of a fixed-price payment and a variable contract-for-difference (CfD) payment.

According to sources, Premier Daniel Andrews and energy minister Lily d’Ambrosio announced that the government remained committed to its renewables target, which is to reach 25 per cent by 2020, and 40 per cent by 2025, although they concede it could happen quicker than that.

Australia's largest renewable energy auction will provide clean electricity for the equivalent of up to 389,000 homes, will reduce the wholesale component of electricity bills by around AUD30 a year for households, AUD2,500 a year for medium businesses and AUD140,000 a year for large companies.

The state expects its first renewables tender to attract an investment of up to AUD1.3 billion (US$1.026 billion).

The government also announced that two new solar farms will be built. They are the 100 MW Bannerton Solar Park near Robinvale in the Sunraysia district, owned by Syncline, and the 38MW Numurkah Solar Farm near Shepparton, owned by Neoen.